Lake Norman Real Estate’s April 2014 Home Sales Report: UP!

For the first time in 2014, Lake Norman home sales were higher than the same month a year ago and the highest since 2007! After struggling since late fall, our real estate market has jumped back to life with surprising strength and velocity. Lake Norman single family home sales were 4% higherthan last April’s and a whopping 37.6% higher than last month’s. March seems to have been the “bottom” of our mini housing dip with 17% fewer closed sales than March 2013. But, the higher “under contact” numbers that showed up last month clearly converted to strong closed sales in April.

Let’s take a look at the April 2014 numbers from our Charlotte Multiple Listing Service for our Lake Norman Area real estate market:

* All data is from the Charlotte Regional Multiple Listing Service. Please note that the MLS started using an entirely new program this month which did away with Area 13 so my numbers may vary slightly from the past but I have made it as close as possible.

Some significant additional statistics for you:

“Distressed sales” (Foreclosures (REOS), defaults, Short Sales) represented 9.4% of Lake Norman’s total home sales which were down slightly from last month’s 11.25, lower than February’s 13.6% and significantly lower than last January’s 29%. We only had 11 distressed home sales in April. The average price for distressed single family home sales was only $197,173. Distressed active listings comprise only 2.9% of our total inventory of Lake Norman homes sale. Clearly distressed sales no longer play a significant role in our Lake Norman real estate market and this is very good news!

Only 23% of our April closed sales were waterfront homes which was even down from 25% last month. The average sales price of a Lake Norman waterfront home in April was $855,894 which is down from last month and most of last summer as well. In April our closed luxury housing sales inched up. Our average price per square foot, at $216.34, was down from last month’s $221.14 and is still well below our peak of$229 last summer. That said, overall Lake Norman’s waterfront home sales above $800,000 are improving.

Only 5 new construction homes closed in April through our MLS but this does not reflect an accurate picture of new home sales since so many are custom or are purchased directly from the builders and therefore never enter the MLS. (In fact, this segment of the market may be skewing our Lake Norman home sales numbers quite a bit). The average listing price vs sales price of new construction single family homes was 98%. Clearly there isn’t a lot if ANY wiggle room on prices of new homes. We currently have 44 new construction homes under contract in the MLS. The average sales price in April logged in at $308,967.

59.8% of Lake Norman’s April single family home sales were under $400,000.

68.4 % of the entire Lake Norman home sales in April were under $500,000. Clearly our lower price ranges are still dominating our housing market.

Our “Under Contract Show” AND “Under Contract No show”/Pending sales combined total of 274 shot up for the second month in a row. ( Last month’s was 243 and February’s was 187). At 274 Lake Norman has 13.2% FEWER homes under contract compared to last year’s 316 at this exact date so we are not up to May 2013 but this is the highest number of homes under contract since last July! We have stopped the bleeding and are definitely on the mend but it is still going to be really tough to match our strong 2013 sales.

A closer look at the chart:

The number of Active Listings in Lake Norman is only 5% higher than last April’s and down from the 15% higher than last March’s. Our absorption rate/months of supply of active listings today is down to a relatively healthy 8.4. Last May 2013 Lake Norman hit our post recession low of 5.9 months of supply. So, while we aren’t in a buyer’s market like last year at this time, using the nationally defined goal of 6-8 months of supply for a balanced housing market puts Lake Norman pretty much in a balanced housing market for the first time in months. The number of new listings has slowed and sales have increased both of which are important to Lake Norman’s real estate market. Another bit of good news is that the average number of days an active listing has been on the market dropped again by 3%.

Under Contract Show (conditional sales), were up a whopping 11% compared to this same time last year and 21% higher than last month! These are homes that just went under contract (have an accepted offer) and still have financial and inspection conditions. They represent future closed sales most likely in late May/June/July. This number would indicate that our closed sales will keep improving and we might even beat 2013 in one of the next few months.

Pending/Under Contract No Show sales are -44% below last April’s making this the eighth month in a row of declines. These are the contracts that are past their inspection/due diligent periods and are just waiting to close. They are usually the best indication of closed sales in the next few weeks. Based upon this I predict that we will most likely not exceed 2013 closed sales numbers this month. However, based upon our new contracts we may have a really strong June/July. FYI, Pending home sales in the US were up in March for the first time in 9 months and I think Lake Norman’s will be next month.

The number of closed home sales in Lake Norman in March as of today and as stated above, was up 4% compared to last year’s for the first time in 2014! The average sales price remained stable.

The total number of Lake Norman homes under contract (UCS + UCNS) in the first week of each month are as follows:

May 6, 2014: 274

April 6, 2014: 243

March 6, 2014: 187

February 6, 2014: 185

January 6, 2014: 155

December 6, 2013: 197

November 6, 2013: 207

October 6, 2013: 207

September 6, 2013: 218

August 6, 2013: 264

July 6, 2013: 271

June 6, 2013: 293

May 6, 2013: 316

April 2, 2013: 290

March 5, 2013: 255

February 7, 2013: 219

January 6, 2013: 184

December 6, 2012: 197

November 7, 2012: 214

October 8, 2012: 218

September 6, 2012: 206

August 6, 2012: 228

July 6, 2012: 234

June 6, 2012: 235

May 7, 2012: 246

April 1, 2012: 227

Here is a breakdown by price-range of our April 2014 closed sales in Lake Norman’s area 13-1 to 13-5:

(These price ranges represented 15% with significant improvements in the $800,000’s and $900,000’s

$1,000,000 – $1,499,999: 5+

$1,500,000 – $1,999,999: 3+

$2 million+ : 1-

(#Solds $1 million+ = 7.6% compared to 8.75% last month, 4.3% in February 6% in January, 9.5 % in December, 4.5% in November, 3.1% in October, 5.7% in September, 4.7% in August, 11.2% in July, 10.4% in June, 4.4 % in May and 7.5% in April 2013)

The most improved price ranges in March were the up to $100,000’s, $100,000’s, $200,000’s, 900,000’s and the $1 million- $1,499,999.

Higher-end home sales in Lake Norman

Mercurial comes to mind when trying to describe our luxury housing market. Suddenly the $900,000 price range sprang to life as did the low $1 million’s after been rather weak for months yet other luxury price ranges remain very sleepy. In April Mooresville had the strongest showing logging in 9 of the 14 total home sales over $900,000.

Waterfront Homes

As goes our higher end sales so goes our waterfront home sales. We currently have 389 waterfront homes actively listed for sale. With only 27 closed sales of waterfront homes in April that means Lake Norman currently has 14.4 months of inventory of waterfront homes for sale. While better than last month, this is significantly higher than a balanced housing market. While I still baffled by the erratic nature of our waterfront and higher priced home sales in Lake Norman, I do think there are some signs of sustained improvement so hopefully we will keep this up. Folks are gobbling up waterfront tear-downs and if you drive or cycle like I do around the waterfront neighborhoods you will see a lot of new construction on the water. New construction in every price range is beating existing homes in popularity.

10-Year Comparison of Lake Norman Home Sales By Month

* Please note that all of my numbers are for single family homes. They come from the Charlotte Region Multiple Listing Service and will not include sales that took place outside of our MLS.

** I adjust past months when I do the monthly update as a few more sales are usually input late by agents.

As you can see in our Lake Norman sales by month and year chart above, Lake Norman’s home sales for the 2013 exceeded 2012’s by 19.7% and were only -7.0% below 2007’s. There is absolutely no doubt that 2013 was a great year overall for the Lake Norman real estate market despite the 4th quarter slowdown.

And, after a sluggish first quarter, our April sales were not only 4% higher than last year’s but may even surpass April 2007’s when a few stragglers come in! So far in 2014 we are 5.5% below 2013 sales.

Summary and My Insight

Good signs/news:

April’s Lake Norman existing home sales were the highest since the recession

This is the second month in a row with overall improving numbers. Given the high numbers of newly under contract, sales the next few months should continue this upward trend.

The average number of days a Lake Norman property took to sell was down 2%.

Our number of active listings seems to have plateaued so I am less worried about having too much inventory going into late spring and summer.

Our Lake Norman home values are stable and slowly improving overall. There are pockets of strengths and relative weaknesses which result in fluctuating average sales prices when combined for the entire Lake Norman real estate market. In addition, the lack of distressed sales has led to higher overall average prices. The “bargains” are all but gone. What I really want to see is measurable increases in Lake Norman home sales in ALL price ranges.

There are pockets of “hot” home sales in the greater Lake Norman area, notably the off-water popular and moderately priced communities in Huntersville, Cornelius and to a lesser extent Mooresville where inventory is very low and multiple offers are not uncommon.

The number of distressed homes for sale are so low they are truly irrelevant and will not play much of a role in our Lake Norman 2014 sales. Prices have increased enough overall that 83% of homeowners actually have equity in their homes again. Nationally, 23% of homeowners are underwater.

New construction is definitely back. While we only sold 5 new homes last month through the MLS, we have 44 under contract and this doesn’t include custom homes and homes to be built in subdivisions. New housing communities as well as custom and smaller groups of spec homes are popping up all over Lake Norman. As I noted above, new construction homes are selling on average for 98% of their listing price.

Charlotte’s 2013 impressive home price gains have been linked to a significant number of investors taking advantage of low prices in “middle class neighborhoods” and turning them into rentals. They therefore have “inflated” prices. Since Lake Norman didn’t enjoy this surge, our sales are more reflective of a truly stable and slowly improving real estate market based on owner-occupied rather than investors and we are already standing on our own.

Because of higher rental prices and low interest rates, it is now better financially for most to buy rather than rent.

Homeowners who went through short sales/foreclosures several years ago are now re-entering the market.

Thanks to rising prices, there are an increasing number of homeowners with increased equity in their homes. In the US housing equity increased 30% this past year.

Pending home sales in the US were up in March for the first time in 9 months.

Because prices are up in many states that feed relocating buyers to our Lake Norman area, more homeowners are able to sell and move than in the past 5 years.

2013 was a very good year overall for Lake Norman with a 19.7% increase in sales.

Challenges/Weaknesses:

Lake Norman’s single family homes average sales price per square foot dropped to $142.42 per square foot. Our lowest price ranges are not only driving our market but they have increased as a percent of the total home sales.

I am seeing a number of new listings on the market that have been leased for several years as sellers waited for prices and the overall Lake Norman real estate market to improve. As this segment of homeowners re-enter the market they may lead to higher than desireable numbers of active listings.

I hear buyers and agents complaining that our inventory of homes for sale is “stale”, especially higher prices on the water. Even new listings are many times homes that were on the market off and on for several years. As has always been the case here in Lake Norman, most buyers want new or move-in condition homes. Since new construction pretty much disappeared after the recession, we are now looking at an aging inventory of homes which is why buyers are turning more towards building than in past years.

Based upon some of their listing prices and recent negotiations I have experienced, I am concerned that these Seller’s confidence may continue to exceed the reality of our market. While the market has picked up and the recession is behind us our prices have stabilized and are expected to increase slowly. Overpriced listings are still sitting.

At the same time I am also concerned that some buyers are too focused on older statistics from the recession and are too fearful of paying our current market value. I experienced this back in the mid-1990’s in California as well. Buyers who had lost money and or their homes due to that recession were very nervous about making good offers and in come cases lost out for a year or more before finding the confidence to actually make a successful offer.

Interest rates are expected to continue to rise in 2014 with some economists predicting they will reach 5% or higher by the end of the year.

Lake Norman’s average days a listing takes to sell, while dropping, is double the national average of 56 days.

Our trade-up and luxury housing niches are still erratic and have yet to gain true momentum unlike the lower price ranges.

Finding the perfect home has become more difficult because much of the older inventory has been picked over. Buyers who want perfection can’t wait too long to make decisions about new listings because the good homes and lots are selling quickly. Watching the “hot sheet” is once again a part of the buying process.

On the flip side, higher-end properties are simply taking much longer to sell.

No matter how hard I try to provide you with the most accurate and insightful data, it is critical to know your own niche because there are so many variables in the Lake Norman housing market. Don’t assume all price ranges and locations are equal. You might be facing multiple offers and/or picked over inventory or you might not.

My advice to Lake Norman home buyers has changed slightly. I still emphasize the importance of good locations and prioritizing your list of features you want in your home and lot. But, if you are looking in a “HOT” neighborhood and price range or if you can’t find your perfect, move-in condition home, be open minded about homes that need some work. If the floor-plan is good, perhaps having to do some painting, new flooring etc. is your best option. While your perfect home might come along, don’t wait too long and don’t dismiss a property if it isn’t perfect. Prioritize: Location, quality and depth of water (if waterfront buyer), lot and floor plan. Then, to determine a realistic price, use VERY RECENT comparable sales in your specific market niche. The selection may not be great but with interest rates near all time lows and prices low but rising it is a great time to buy. With less than 3% of Lake Norman’s current listings being “distressed sales” don’t expect a “bargain” to come along at an unrealistic price. Low-balling, except on distressed properties, really isn’t a great strategy nor will it result in a lower price. To the contrary, it usually serves to offend the sellers and gets the negotiations off on the wrong foot.

Don’t focus as much on the price as on the future marketability of the property. A bargain that has incurable issues that will make it difficult to resale, really isn’t a bargain at all. Be smart!